A Defense of Wal-Mart

February 8, 2009 — Ron Chusid

Wal-Mart is not a particularly popular company on the left, but those who actually work there seem to have a better view of the company. Charles Platt, a former writer for Wired, went undercover as a Wal-Mart employee to get a different view of working life in America than that presented by Barbara Ehrenreich in Nickle and Dimed. He found that many who worked for Wal-Mart were happy with their jobs:

A week later, I found myself in an elite group of 10 successful applicants convening for two (paid) days of training in the same claustrophobic, windowless room. As we introduced ourselves, I discovered that more than half had already worked at other Wal-Marts. Having relocated to this area, they were eager for more of the same.

Why? Gradually the answer became clear. Imagine that you are young and relatively unskilled, lacking academic qualifications. Which would you prefer: standing behind the register at a local gas station, or doing the same thing in the most aggressively successful retailer in the world, where ruthless expansion is a way of life, creating a constant demand for people to fill low-level managerial positions? A future at Wal-Mart may sound a less-than-stellar prospect, but it’s a whole lot better than no future at all.

In addition, despite its huge size, the corporation turned out to have an eerie resemblance to a Silicon Valley startup. There was the same gung-ho spirit, same lack of dogma, same lax dress code, same informality – and same interest in owning a piece of the company. All of my coworkers accepted the offer to buy Wal-Mart stock by setting aside $2 of every paycheck.

They were less enthused about health benefits, which offered minimal coverage during our first six months. The full corporate plan would kick in after that, but seemed to require significant employee contributions. Still, my fellow trainees assured me that health plans at other retail chains were even worse, and since the federal government had raised the limits for Medicaid eligibility, that was an option for people with children. (In the time since my experience at Wal-Mart, the company has improved its health plans significantly.)

Wal-Mart employees saw the potential of corporate advancement as a reason to work there as opposed to doing similar work for a mom and pop store. I wonder how many actually experience such advancement. The real problem is not that Wal-Mart pays so little but that we have so many people who are not qualified for other jobs:

I found myself reaching an inescapable conclusion. Low wages are not a Wal-Mart problem. They are an industry-wide problem, afflicting all unskilled entry-level jobs, and the reason should be obvious.

In our free-enterprise system, employees are valued largely in terms of what they can do. This is why teenagers fresh out of high school often go to vocational training institutes to become auto mechanics or electricians. They understand a basic principle that seems to elude social commentators, politicians and union organizers. If you want better pay, you need to learn skills that are in demand.

The blunt tools of legislation or union power can force a corporation to pay higher wages, but if employees don’t create an equal amount of additional value, there’s no net gain. All other factors remaining equal, the store will have to charge higher prices for its merchandise, and its competitive position will suffer.

This is Economics 101, but no one wants to believe it, because it tells us that a legislative or unionized quick-fix is not going to work in the long term. If you want people to be wealthier, they have to create additional wealth.

To my mind, the real scandal is not that a large corporation doesn’t pay people more. The scandal is that so many people have so little economic value. Despite (or because of) a free public school system, millions of teenagers enter the work force without marketable skills. So why would anyone expect them to be well paid?

In fact, the deal at Wal-Mart is better than at many other employers. The company states that its regular full-time hourly associates in the US average $10.86 per hour, while the mean hourly wage for retail sales associates in department stores generally is $8.67. The federal minimum wage is $6.55 per hour. Also every Wal-Mart employee gets a 10% store discount, while an additional 4% of wages go into profit-sharing and 401(k) plans.

If Platt’s experience is typical, it very well might be true that for many people with limited educations a job at Wal-Mart is one of their best prospects. There is also the possibility that those with limited educations are not in the best position to evaluate different options, especially when most are so poor.

Platt also discussed his article further in a blog post at BoingBoing:

If you haven’t heard of Adam Shepard, this illustrates my point. His remarkable book Scratch Beginnings, now being promoted through www.scratchbeginnings.com, describes how he went through an experience far more gruelling than my brief flirtation with low-paying work. He placed himself in a homeless shelter with $25 in his pocket, found a job as a day laborer, then worked for a moving company, and after 10 months had a pickup truck, an apartment, and $2,500 in savings. His conclusion: People can still make it in the United States if they are willing to live carefully on a budget and work hard.

Somehow that kind of news is never as popular as denunciations of the free market written by professional handwringers such as Barbara Ehrenreich.

Shepard’s example supports Platt’s underlying argument against Barbara Ehrenreich but also strengthens my suspicion that for smarter and harder working individuals there are probably better routes for potential success than a starting job at Wal-Mart. On the other hand Adam Shepard is certainly not typical of the average person taking a job at Wal-Mart. For many this might be their best option.

3 Comments

I’ve always felt that Wal Mart would be legitimate if it would only comply with the law. There are far too many areas where it is unsatiisfied with becoming the largest and most profitable company in the world while staying within the law. But it has to go further. Why cheat employees out of earned hours by requiring that they go “off clock?” Why lock them in the building during overnight shifts? Why discriminate on gender?

Platt’s article does white wash these questions–but (assuming he is reporting honestly) he is describing his own experiences.

If we can believe what he writes, it sounds like, at least at the store where he was, they have stopped the practice of cheating employees by going off the clock.

Wal-Mart might have corrected some of their problems. We will need more than one person’s account to determine that. He might be right about improvements in the health care benefits. In the past it was very common to see insurance claims from patients working at Wal-Mart not be paid. I am no longer seeing that (but I also only see a small sample of Wal-Mart employees as patients so I cannot say for certain that the problem has been solved).

I do some work with Wake-Up Wal-Mart, and we see so many horror stories that belie the narrative Platt provides here. Obviously, he is providing his own experience– but his logic is just so terrible. I wrote something about it here.